Investing Insights Investing in AI? Here Are 6 Undervalued Stocks for Buy-and-Hold Investors
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Sep 5, 2025 Dave Sekera, Chief US Market Strategist at Morningstar Research Services, dives into the complexities of investing in AI. He discusses whether the AI hype marks a genuine boom or a speculative bubble. The conversation shifts to Nvidia's pivotal role amidst US-China tensions and its potential market opportunities. Sekera also highlights specific undervalued stocks, like ASML and Microsoft, as promising investments. This lively exchange is packed with insights on navigating the evolving landscape of AI investments.
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AI Spending Is Strong But Priced In
- AI spending remains very strong and is likely to continue in the foreseeable future.
- Much of that growth is already reflected in current valuations of many AI-related stocks.
Begin With Broad Market Exposure
- Start with broad exposure via mutual funds or ETFs to avoid concentrated risk in a few AI names.
- Recognize that index weights already give many investors significant exposure to AI mega-cap stocks.
Mega-Cap Valuations Reflect Future Growth
- Mega-cap AI names often trade at rich multiples but future earnings growth can justify higher prices.
- Morningstar models price in rapid earnings growth, making many of these stocks fully valued today.